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Technology is constantly changing, and sometimes it is difficult to keep up with all of these futuristic alterations. One big technology that has gripped Texas—and the nation—is digital currency and assets. Because more and more people are getting involved in digital currency, the federal government has started to regulate and mitigate the risks of digital assets and their underlying technology. These pieces of legislation and regulations may be confusing to individuals just learning about cryptocurrency. Because of this, explanations to common questions about digital assets and their legislation are below.

What Are Digital Assets?

While the terms “digital asset” and “digital currency” have become more popular over the years, many individuals are still unsure of what these terms mean. Digital currencies are a form of digital money or monetary value. Similarly, a digital asset refers to financial assets that are issued or represented in a digital form through the use of a technology ledger. A digital currency, therefore, can be a form of a digital asset, along with cryptocurrencies, securities, derivatives, and other financial products. Digital assets can be exchanged across digital asset trading platforms. Digital assets have grown exponentially over the past few years: by November 2021, non-state issues digital assets reached a combined market capitalization of $3 trillion.

What Are Some Recent Laws Impacting Digital Assets?

One regulation that impacts digital assets was an Executive Order—entitled Ensuring Responsible Development of Digital Assets—recently signed by President Biden. The goal of this Executive Order is to create a national policy for digital assets by addressing the risks of cryptocurrency while also encouraging Americans to take advantage of its potential benefits. The Order directs various areas of the federal government, including the Justice Department, the Department of Treasury, and the Federal Reserve System among others, to study the legal and economic implications of creating a U.S. central bank digital currency. This would be a form of digital money with a national unit that has direct ties to a central bank.

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When crafting their estate plan, many individuals want to leave assets or gifts to their children, grandchildren, or other loved ones under the age of 18. However, there can be unique issues presented when gifting assets to minors, as compared to other adults. Most people do not consider these implications when crafting their estate plans. But there are ways in Texas to still gift property and assets to minors in which they can benefit from these gifts in the future. Below is information about these options, along with explanations of the most common questions asked about gifting to minors in Texas.

Why is Gifting to Minors Different than Gifting Assets to Adults?

One reason why individuals must gift differently to minors is that people under the age of 18 lack the legal capacity to own property. So, when a loved one passes away and has left assets in their will to a child, there are different rules that apply. Similarly, people may be afraid to leave assets or property to minors—worried they would mismanage the funds or not be responsible enough to handle such a gift. This is a common concern; however, it should not be the reason that minors are not included in a will.

The Texas Uniform Transfers to Minors Act

One method to still gift to Texas minors—while avoiding all of the complications above—is the Texas Uniform Transfers to Minors Act (TUTMA). Under this act, all assets gifted to a minor will be held in a custodial account until they reach the age of 21. As well as invoking the TUTMA in the will, the individual gifting the property must also name a custodian in their will. This custodian will manage the assets for the minor’s benefit until they can utilize them.

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Because there are proposed and implemented changes every year to the federal and state tax code, Texans should always be vigilant as to how these changes affect their gifting practices and their estate plans. In many cases, without the assistance of an estate planning attorney, these changes may seem minuscule and not even be noticed. However, newly passed laws may have a major impact on Texans and how they should implement their estate plan—plus changes they can make to take advantage of these changes. Below are some of the proposed changes that may occur in 2022 that Texans should be aware of and strategies to combat these changes.

Reduction to the Estate Tax Exemption

In the past year, there were proposals to reduce the estate tax exemption—meaning, lowering the amount after which individuals will need to pay a tax on their estate. The current amount is $12.06 million; however, this past year, there were proposals seeking to reduce the amount to $3.5 million per individual. If the amount were lowered this significantly in the upcoming year, many individuals who currently will not have to pay an estate tax will be forced to. However, even if this proposal is not adopted this year, the current estate tax law is set to reset in 2026 to $5 million—this is unlikely to be changed. Therefore, individuals should start planning and strategizing now if their estate value is around $5 million. Most of the strategies involve reducing the estate amount below the exemption limit—either by putting funds in irrevocable trusts or gifting it to loved ones or charity.

While families usually think about creating estate plans and planning for the future as a single unit, this is not always advisable. Every individual has unique estate planning needs that may differ from their spouse or children. For example, women may want to think differently about estate planning—and specifically saving for retirement—than many men. This is for a variety of reasons, including the gender pay gap and higher life expectancy, among others. Below are some of the explanations for why women should approach estate planning differently and how to overcome these obstacles.

Longer Life Expectancy

On average, women have a longer life expectancy than men. While this does not sound critical for estate planning and retirement purposes, it should. When saving for retirement, women may not be considering that they may live beyond their life expectancy. If they outlive their life expectancy, they may not have saved enough for retirement. Thus, they would not have enough money to live comfortably—and have the discretionary funds for health expenses.

For many parents, it can be difficult to think about how their children will have to take care of them in their old age—and how they will have to pick up the pieces once they pass away. Because of this, many parents will avoid including their children in the estate planning process or, worse, not take any estate planning measures at all. While the initial goal may have been to avoid burdening their children, not creating an estate plan can have the opposite effect. Below are some tips and information that individuals should take now to prevent uncomfortable situations—often that their children will have to handle—in the future.

Create a Will

One of the most important estate planning steps is to create a will. Having a will in place dictates how a person’s assets are to be distributed. If a person does not have a will and they pass away, their assets will go to probate court where a judge will decide who will receive the items in the estate. This process can take months or years and is often difficult for loved ones to handle and manage during an already emotionally fraught time. Similarly, having a will in place reduces the stress that loved ones face of knowing whether the assets are going to the person the deceased would have wanted.

Implementing a Power of Attorney

Talking with loved ones about who will serve as a power of attorney can reduce future family infighting and worries when a loved one becomes ill or incapacitated. A healthcare proxy makes decisions on another person’s behalf when they become physically or mentally incapacitated and thus cannot make these choices for themselves. Many parents do not want their children to have to make these decisions; however, many children would rather be in charge of their parent’s medical decisions than see an uninterested party make them—or worse, have no one who is able to make these decisions at all.

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When people focus on creating or updating their estate plan, many wait so they have certainty about their tax situation. Because laws are constantly being passed that may impact their taxes—both now and in regard to their estate plan—individuals assume it is best to wait to review the plan until these bills have been passed. However, because of these constant changes, waiting is not advised. Additionally, there are non-tax aspects of estate planning that should be finalized as soon as possible. Below are some of these aspects and explanations for why estate planning should not be delayed.

Reason #1: Guardianship for Children

For individuals with children, it is essential to have an estate plan in place. Because if the person dies, having an estate plan allows them to name a potential guardian. This would be the person who would take care of the children. In many cases, this would be the surviving spouse; however, there should be a section addressing if the surviving spouse pre-deceases the other or if the partners die in a common accident. Without an estate plan, there may be fighting amongst family members or loved ones about who should raise the children if a tragedy occurs, and their parents pass away. Avoiding this potential struggle is easy by creating an estate plan.

Over time, people have recognized the differing needs individuals have when it comes to estate planning. While they may know that no two people will have the exact same estate plan, depending on the person’s livelihood, relationship with loved ones, and even their sex. This is surprising to most individuals. For example, women may have some unique estate planning needs that most men do not have. These needs extend to all aspects of the estate planning arena, including retirement needs, caretaking responsibilities, and end-of-life care. Below are some common issues that women face when going through the estate planning process, along with how life insurance may be the solution to these difficulties.

Earning Challenges

One such struggle with estate planning that women face is the earning power challenges that make it difficult to plan for retirement. Considering women still only earn approximately 82 cents for every dollar a man makes—with the amount being lower for women of color—this makes it even more essential to plan ahead for the future. Without adequate savings for retirement, women may feel they need to work even longer in order to be financially secure in their final years of life.

The estate planning process can be complicated for those just beginning since there is a lot to learn. Because of this, most people do not know how probate can impact estate planning overall. Probate is the court administration of an individual’s estate—which occurs after they have passed away. Depending on the amount of planning an individual has done before they die, the probate process may either be smooth or difficult. Below are some common questions and explanations about the probate process and how Texas estate planning attorneys advise their clients on these issues.

What is Probate?

After a person’s death, the court reviews the deceased’s debts in probate—if they had any—and then distributes their remaining assets to loved ones. Most people are surprised that regardless of if the person had a will or not, they will go through the probate process. If the person had a will in place, called a testate, then the process is much easier and is less likely to be questioned. However, if the person did not have a will, called intestate, the process is often much more complicated. This is another reason why it is critical to have an estate plan in place.

As a younger generation, many individuals assume that millennials do not need an estate plan yet—mainly because they are far from needing to use it. However, this is not always the case. Millennials are creating estate plans at a record rate. They recognize the importance of planning for the future and ensuring their loved ones will be taken care of—regardless of their net worth—and not delaying the process. Viewing the estate planning trends that many millennials are using can be instructive in finding the estate plan that works best for others. Below are some of these trends and how people can utilize them in their estate plans.

What Motivates Millennials to Create Estate Plans?

Everyone has a different motivation for drafting estate plans and planning for their future. According to a recent survey, millennials were most motivated to make a plan because they had a child. Often when someone has a child, they want to ensure they are financially and physically taken care of—this includes leaving them assets in their will and appointing guardians for the kid in case the parents pass away. More so than other generations, millennials are designating non-blood relatives as a guardian.

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